prev

NCLH 1Q13 CONF CALL NOTES

Bookings picked up in the last few weeks.  Pricing improvement in Europe is slow.  The company believes everything is going as planned in 2013. 

 

 

"We are excited to announce another quarter of strong results, especially in light of this being our first quarter as a publicly traded company.  These strong results bring us to nineteen consecutive quarters of year over year Adjusted EBITDA growth."

 

- Kevin Sheehan, Norwegian Cruise Line's President and CEO

 

CONF CALL NOTES

  • Start to 2013 Wave Season was robust with strong onboard spend 
  • Caribbean/Hawaii performed well in 1Q.  
  • European ships increased from 1 to 2 ships in 1Q.  
  • IPO proceeds:  raised $477.6 MM 
  • Onboard particularly strong in bar and short-excursion categories
  • Pride dry-dock expected to be done by September 
    • Invested in scrubber technology to comply with EICA requirements; should be operational by year-end
  • 2Q deployment schedule:  26% Caribbean, 23% in Mediteraran, 7% in Baltic, 7% in Hawaii,  12% Bermuda, 12% Alaska, 12% other

 

Q&A

  • Triumph effect was only 'on the margin'
  • Europe booking through the season is good.  Pricing back to where they are hoping for.
  • Last couple of weeks, booking levels exceeded what mgmt was looking for
  • Caribbean is booking well
  • Booking period has been extended
  • Booking volume ex Breakaway YoY is pretty much where they're hoping to be
  • Solid position in 4Q; 3Q is also looking well
  • Do not want to provide 2H guidance color at this time
  • Bookings 2014: higher volume and higher prices YoY
  • 2013 % booked vs 2012: up mid-to-high single digits 
  • Triumph affected call volume in North America
  • $0.01 of additional costs will swing into 2Q due to timing
  • 2013 three drydocks: Pride, Pearl, and Sky
  • The guidance range is due to uncertainty with Breakaway
  • Alaska operating the way as expected
  • European booking volume has accelerated in the last couple of weeks
  • Confident that onboard spending will be strong on Breakaway
  • Pricing:  extremely strong pricing on Pride of America; Europe pricing starting to come back slowly 

 

HIGHLIGHTS FROM THE RELEASE

  • An increase in Net Yield, partially offset by lower Capacity Days primarily due to the planned Dry-dock of Pride of America, resulted in a 1.3% improvement in Net Revenue
  • Net Yield increased 3.3%... on stronger overall pricing and increased onboard spend, particularly in the bar and shore excursion areas
  • Adjusted Net Cruise Cost ex Fuel decreased 1.5%... mainly due to the timing of certain expenses. 
  • The first quarter included a portion of the Pride of America Dry-dock which extended into the second quarter. Incremental Dry-docks in subsequent quarters include Norwegian Pearl and Norwegian Sky.
  • Interest expense, net for the period was $127.7 million and included $90.5 million in charges related to the prepayment of certain credit facilities and the redemption of certain of the Company's senior notes in connection with proceeds from both the Company's IPO and Notes Offering. 
  • On April 25, 2013, the Company took delivery of the newest ship in its fleet, the 4,000 passenger Norwegian Breakaway
  • Norwegian Breakaway's sister ship, Norwegian Getaway, continues construction for an on-time delivery in January 2014
  • As of March 31, 2013, anticipated capital expenditures for business enhancements were $57.2 million for the remainder of 2013, and $77 million for each of the years 2014 and 2015.  As of March 31, 2013, anticipated capital expenditures for ship construction were $681.1 million for the remainder of 2013, $755.6 million for 2014 and $788.5 million for 2015, of which export credit financing is in place of $572.8 million for 2013, $657.1 million for 2014 and $621.1 million for 2015, based on the euro/U.S. dollar exchange rate as of March 31, 2013.

NCLH 1Q13 CONF CALL NOTES - nclh1

 

NCLH 1Q13 CONF CALL NOTES - nclh2

 

NCLH 1Q13 CONF CALL NOTES - nclh3


Broken: Gold Levels, Refreshed

Takeaway: Gold failed to recapture my 1st line of resistance (1492) and remains in a Bearish Formation (bearish TRADE, TREND, and TAIL) as a result.

I’m getting a lot of client questions about Gold today. I focused on it in my Early Look note this morning, but there was nothing new there – and that’s the point. Gold is broken. And that’s not new either.

 

Across our core risk management durations, here are the Gold lines that matter to me most:

 

  1. Long-term TAIL risk line = 1681
  2. Intermediate-term TREND resistance = 1579
  3. Immediate-term TRADE resistance = 1492

 

In other words, after bouncing to another lower-high in the last few weeks, Gold failed to recapture my 1st line of resistance (1492) and remains in a Bearish Formation (bearish TRADE, TREND, and TAIL) as a result.

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

Broken: Gold Levels, Refreshed - gold

 


JAPAN: Celebrate Good Times

Japan's Nikkei 225 Index moved +3.6% to the upside overnight putting its year-to-date performance at an astounding +37.4%, second only to Venezuela, which is enjoying +44% gains for the same time period. Weaker Yen, monetary policy at the Bank of Japan keeps everything in check. How high can we go?  At this rate, much higher if Japan is OK with its currency being burned.

 

JAPAN: Celebrate Good Times - NIKKEI225


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.64%

MACAU: STRONG START TO MAY

This note was originally published May 06, 2013 at 15:36 in Gaming

While five days of data is not enough from which to draw many conclusions, the May holiday is off to a strong start.  Average table revenues for 5 days spanning April 30-May 4th were HK$1.2 billion, up 24% year-over-year (HK$975 million) and up 36% from last week’s HK$886 million.  In-line with our earlier projections, we expect May gross gaming revenue growth to accelerate to 16-20% or HK$29.5-30.5 billion.

 

In terms of market share, Galaxy and Wynn were big gainers.  Galaxy’s share shot up to 21.1% from 17.8% share in April while Wynn’s share rebounded to 12% from the April low of 9.2%.  MPEL gave back its massive share gains in April and dropped back to its 6M average share of 14.0%. 

 

MACAU: STRONG START TO MAY - M1

 

MACAU: STRONG START TO MAY - M2


Gold's Demise

Gold (GLD) continues to move into full blown crash mode after testing our TRADE line of resistance at $1490/oz and failing miserably. It's back at $1445/oz now, down over -1.5% on the day. A strong US dollar and growth and consumption moving full speed ahead do not bode well for the precious metal that everyone is now reconsidering.

 

Gold's Demise - YTDGOLD


In It To Win It

Client Talking Points

Big In Japan

Japan's Nikkei 225 hit a fresh 5-year high today as Japanese stocks rip the the upside (while the Yen flirts with the downside). The Nikkei is up +3.6% in overnight trading and is up +37.4 year-to-date. Bravo! As long as your central bank is in this market to rip 'em higher and win big, investors can't lose.

Goodbye To Gold?

Say goodbye to gold, folks. Gold is down nearly -0.8% this morning as people realize that consumption is good for stocks, bad for gold. Combine that with a stronger US dollar and you'll realize that gold isn't bottoming - it's crashing. Gold failed again at our TRADE line of resistance of $1490/oz. Things get tougher for gold here, not easier.

Asset Allocation

CASH 27% US EQUITIES 20%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 6% INTL CURRENCIES 27%

Top Long Ideas

Company Ticker Sector Duration
IGT

Decent earnings visibility, stabilized market share, and aggressive share repurchases should keep a floor on the stock.  Near-term earnings, potentially big orders from Oregon and South Dakota, and news of proliferating gaming domestically could provide near term catalysts for a stock that trades at only 11x EPS.  We believe that multiple is unsustainably low – and management likely agrees given the buyback – for a company with the balance sheet and strong cash flow as IGT.  Given private equity’s interest in WMS (they lost out to SGMS) – a company similar to IGT that unlike IGT generates little free cash – we wouldn’t rule out a privatizing transaction to realize the inherent value in this company. 

WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow.  

FDX

With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view. 

Three for the Road

TWEET OF THE DAY

"#FastFact Breakfast accounts for 25% of McDonald's sales $MCD" -@BloombergTV

QUOTE OF THE DAY

"I'm worried that the universe will soon need replacing. It's not holding a charge." -Edward Chilton

STAT OF THE DAY

MBIA (MBI) stock soared +45% yesterday on news that it has reached a settlement with Bank of America related to various mortgage lawsuits stemming from the housing crisis.


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

next